Ministers are being ordered to draft plans to cut 1 per cent from their departments’ budgets as a new Whitehall spending war looms.

Philip Hammond, the Defence Secretary, and Theresa May, the Home Secretary, are among Cabinet ministers who have been lobbying for their departments to escape the Chancellor’s axe.

Mr Osborne has told his colleagues to find £11.5 billion of savings from Whitehall departments in 2015-16. The figure, higher than the £10 billion of cuts previously announced for the period, is likely to prompt a fresh round of heated wrangling as ministers fight to protect their own turf.

Details on where the cuts will fall are due to be announced on June 26, when the Spending Review is published for the financial year starting in April 2015.

Spending on schools and the NHS is expected to be protected. Mr Osborne has also confirmed his commitment to maintaining the share of national income that is spent on overseas aid.

Conservative ministers have argued that further cuts must be found by first reducing the bill for state benefits for the unemployed. Senior Treasury sources insisted that while the Tories would like to cut welfare spending further, the Liberal Democrats in the Coalition were vetoing any more cuts to benefits.

“The assumption is that there won’t be further specific welfare savings in the review,” said the official.

The official also promised that the state pension would not be hit by cuts. Pensions are protected by the so-called “triple lock”, which guarantees pensions will rise every year by the highest of average earnings, inflation or 2.5 per cent, he said.

The protection for welfare and pensions means that even larger cuts are now expected for departments such as defence, transport and the Home Office.

Public sector pay rises will be strictly limited to average increases of just 1 per cent in 2015-16, extending the cap on pay rises for one more year.

The Government will spend £745 billion in 2015-16, Mr Osborne told MPs. At the same time, spending on capital projects will rise by £3 billion to generate growth and create more jobs.

Along with protection for health, schools and international aid, defence equipment budgets are to be allowed to rise by 1 per cent above inflation from 2015.

There are fears that the NHS, as the country’s largest single employer, faces further pressure on its finances as public sector employers’ National Insurance contributions increase to raise money for reforms to elderly care.

Andrew Mitchell, the former chief whip and international development secretary, welcomed the “courageous and wise” decision to maintain the foreign aid budget at 0.7 per cent of GDP. Mr Osborne said he took pride in the “historic achievement for our country” of maintaining spending on aid to foreign countries.